No respite for Credit Suisse as investors dump rights in $2.3 billion cash call


MILAN (Reuters) -Shares in Credit Suisse tumbled to another lifetime low below 3 Swiss francs on Tuesday as investors dumped rights to subscribe to new shares in the loss-making lender.

The rights offering, which is part of a broader capital raise worth 4 billion francs, is intended to help fund the bank's turnaround plan, an attempt to recover from the biggest crisis in its 166-year history.

By 1036 GMT, Credit Suisse shares fell 2.6% to 2.93 francs as the rights tumbled as much as 27% to as low as 0.105 on their second day of trading on the Swiss exchange.

The offering, which is guaranteed by a group of banks, will raise as much as 2.24 billion Swiss francs ($2.3 billion) and follows a 1.76 billion-franc share placement where Saudi National Bank took a 9.9% shareholding in Credit Suisse.

Shareholders in Switzerland's second-biggest bank have the right to purchase two new shares at 2.52 francs each for every 7 rights they hold by December 8.

Investors fear the cash call might not be enough to stabilise the bank, which said last week it could book a pre-tax loss of up to 1.5 billion francs in the fourth quarter, and revealed that wealthy clients had made hefty withdrawals.

That had led to a big drop in liquidity, breaching some regulatory limits.

Credit Suisse's five-year default swaps, a form of insurance for bondholders, blew out to a new record high of 403 basis points on Tuesday, according to data from S&P Market Intelligence.

($1 = 0.9502 Swiss francs)

($1 = 0.9502 Swiss francs)

(Reporting by Danilo Masoni; Editing by Amanda Cooper)


More Related News

FIFA bans four Uruguay players over World Cup incidents
FIFA bans four Uruguay players over World Cup incidents

Four Uruguay players, including Diego Godin and Edinson Cavani, have been suspended over incidents following the team's World Cup match against Ghana, FIFA announced on Friday.Uruguay were incensed by refereeing decisions during their 2-0 win over Ghana in their final group game in Qatar last December.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Economy